ABSA: Customer Relationship Management

ABSA selected Accenture to help it set new standards for customer service and less expensive borrowing. Accenture developed a three-and-a-half year re-engineering initiative that could save ABSA more than R640 million ($80 million) if it centralised risk management and standardised policies and processes.

Four banks amalgamated in 1991 to form ABSA, a process that was completed in 1998. But by the end of 1997, the bank's lagging performance contributed to a loss of market share. Increasing numbers of high-risk customers were on board and growth targets were not being met.

ABSA's cost/income ratio was seriously out of proportion and was 11 percent higher than that of its peers. Added to this was the threat of global competition on home soil, rising interest rates, increasing bad debts and stagnant income—all in an over-traded market.

Specific problems were:

• An inefficient credit-risk management function overstaffed by overworked employees bogged down by excessive manual intervention, duplication and complexity.
  
  
• Senior branch staff spent too much time on low-level administrative tasks.
  
  
• Credit policies couldn't be applied consistently across the 655 different locations.

ABSA wanted to set new standards for customer service and less expensive borrowing. To achieve this it needed to call on international expertise in the financial services market.

At the program's outset in 1997 Accenture drew on the skills of consultants from five countries to devise a unique "opportunity assessment" for ABSA. It identified that the bank could save more than R640 million ($80 million) if it centralised risk management and standardised policies and processes.

This led to ABLE—the ABSA Lending Enterprise Program—a three-and a half-year re-engineering initiative divided into projects able to deliver both short-term wins while tackling long-term tasks.

Major changes include:

• Centralised and standardised credit functions that eliminate policy deviations and improve processing turnaround times.
  
  
• A complex computer-based scorecard that automates decision-making in extending credit and interest rates.
  
  
• Streamlined retail and commercial processes increase productivity and improve customer service.

Although still a work in progress, the impact of ABSA's re-engineering is already being felt. Cost reductions of R480 million ($60 million) a year have been achieved, as well as a significant improvement in the quality of the assets through consistent decision-making.

The computerized scorecard has raised morale, boosted satisfaction and won an accolade from Computerworld's Smithsonian Awards program. The project has provided a sound base for credit and risk management in ABSA's planned strategic business unit restructuring.

Key to the project's success is Accenture's access to international best thinking on credit and risk management.